Before diving into answering the question posed in this subsection of the Binance Coin Guide, it is first necessary to establish what centralized exchanges and decentralized exchanges are so that their differences may be illuminated.
Let's begin with what a 'centralized exchange' is. The concept of 'centralization' makes reference to the use of a third-party middle man to aid in the finalization of transactions. An element of trust is exhibited by both buyers and sellers in this middleman to safely entrust their assets. This occurs in much the same way as a traditional Bank relationship where the banking customer trusts the bank to safely hold the customer's asset. In a centralized cryptocurrency exchange, customers trust that the exchange will use the available network to find trading partners for the transaction and as well trust the exchange will safely complete the transaction on their behalf.
In comparison, a 'decentralized exchange' is an alternative to a 'centralized exchange'. The end result of a completed transaction is the same, but the method as to how the result is reached is dissimilar. In a decentralized exchange the middle man is removed from the equation creating what is known as a trustless environment [an environment where users can interact with each other in a purely peer to peer format without having to trust anything but the smart contracts within the system]. In this type of exchange, the underlying assets in a transaction are never transferred to a third party middle man [escrow service] but the transactions are solely completed by either smart contracts or atomic swaps [a smart contract technology that enables the exchange of one cryptocurrency for another without using centralized intermediaries].
First and foremost, Binance is both a cryptocurrency and an exchange. The name Binance is derived from the term 'binary finance' and according to its blog, as an exchange it aims to power the future of cryptocurrency finance. Armed with this information the lead question may now be answered.
Binance is a 'centralized exchange' so the lead question is answered in the negative. It is a neutral third party exchange facilitating the transactions of cryptocurrency between two parties. In other words, Binance is the middle man. It acts to match customers' cryptocurrency needs with institutions offering the product desired. Binance minimizes any system friction by improving liquidity and providing convenience in effecting the trade. The liquidity provided by Binance exchange enables the buying and selling of multiple cryptocurrencies to occur at a stable price.
In summary, the words of the Binance founder, Changpeng Zhao (CZ) sums up the current status of Binance with regard to this subject:
Binance Chain will be decentralized in the sense that users hold their own private keys. They no longer need to deposit their funds to a third party platform before being able to trade. However, as a new blockchain, the initial team will naturally have more influence over the strategic direction of its growth. We believe this is a good thing for a young chain and will allow faster decision making and a higher degree of efficiency.
[Zhao, C. "CZ on Centralization Vs, Decentralization". https://www.binance.com/en/blog/301982828007075840/cz-on-centralization-vs-decentralization. (Accessed June 19, 2021)].
